Group Helps Obtain Loans For Businesses

Before he became vice president of the Florida Business Development Corp., Jerry Abraham spent eight years in the U.S. Army, where he worked in combat support.

In some ways, that experience turned out to be ideal training for working at his firm, a private, non-profit institution that helps small businesses get government-backed loans.

``It`s almost like combat, what goes on between the (Small Business Administration), the banks and small business concerns.... We`re in the position of trying to bring everybody together,`` he said.

Founded in 1989, Abraham`s Palm Beach-based firm seems to be holding its own. He runs it with his brother, Alan, Scott Gardiner, a former Merrill Lynch employee, and attorney David Schwartz.

The Florida Business Development Corp. is one of about 400 certified development corporations, known as CDCs, licensed by the Small Business Administration, including eight in Florida. It has helped 55 South Florida small businesses get loans ranging from $200,000 to $1.8 million.

In the last fiscal year, which ended Sept. 30, Florida Business Development Corp. obtained 23 loan authorizations, putting it in the top 5 percent of CDCs nationally, Abraham said.

Between 60 percent and 70 percent of the loans have been for Broward County businesses, he said.

``Florida Business Development Corp. is the most active certified development corporation we have in the state of Florida,`` said Patricia McCartney, chief of the financing division of the SBA`s Miami district, based in Coral Gables.

McCartney attributes the group`s success to aggressive marketing and to the 12-county area in which it works, which is larger than that of some other CDCs.

The loans come courtesy of a 10-year-old SBA program, known since 1986 as the ``504`` program. They are designed to help firms that are at least two years old and are healthy enough financially to meet most conventional bank loan requirements.

Most of the companies with which Abraham has worked are either trying to buy buildings they lease or are looking to build larger ones, he said.

For a $1 million loan project, the program essentially would work this way: A bank finances $500,000 of the cost of the project, the SBA finances $400,000 of the cost, and the small business itself puts up $100,000 of the cost of a project as a down payment.

Banks like the program because their exposure is limited to 50 percent, as opposed to the 75 percent to 80 percent exposure they assume in most conventional loans, Abraham says.

Small businesses like the program because they are generally required to come up with half of the money ordinarily needed as a down payment. Many commercial loans require 20 percent to 30 percent down, he says.

Another attraction for the small businesses is that banks are required to agree to a 10-year term. Usually, five years is the norm, Abraham said.

``Amazing. A government program that actually seems to work,`` said Gary Geller, president of Lasertron Inc., a contract laser-cutting shop in Sunrise, which obtained a loan worth about $1 million with the help of Abraham`s organization.

The loan enabled Lasertron to expand from a 5,000-square-foot building into a 19,000-square-foot plant large enough to house two pieces of machinery too big for the old site, Geller said.

While Geller said he had to put down more than 10 percent of the cost of his project -- he committed about $250,000 -- he thinks it was still less than if he had tried to get a loan on his own.

Geller said he has heard of instances in which banks want as much as 50 percent up front.

Jack Morris, president of Imperial Electric & Lighting Supply Inc. in Davie, said the $1 million loan his company got through Florida Business Development Corp. helped his firm build a new main complex, tripling its space, and to expand by opening a retail showroom last December.

Until opening its showroom, the 19-year-old firm had been a wholesale distributor, working primarily with contractors.

``We might have been able to do the building, but not the expansion,`` Morris said.

What`s in the deal for the CDCs?

On a $1 million loan, Florida Business Development Corp. gets a $6,000 processing fee and a service fee of $172 a month for the next 20 years, Abraham said.